- Business combination creates a leading
electronic materials player able to capitalize on attractive
long-term secular growth drivers
- Versum is a “Best in Class” asset with
industry-leading financial metrics
- Expected to be immediately accretive to
earnings per share pre (EPS pre)
- €75 million in expected run-rate
synergies by the third full year after closing
- Commitment to preserving strong
investment grade credit rating
- Versum has terminated its previously
announced merger agreement with Entegris
Merck KGaA, Darmstadt, Germany, a leading science and technology
company, has signed a definitive agreement to acquire Versum
Materials, Inc. (NYSE: VSM) for $53 per share in cash. The business
combination has been unanimously approved by the Executive Board of
Merck KGaA, Darmstadt, Germany and by Versum’s Board of
Directors.
“With this transaction, Merck KGaA, Darmstadt, Germany, will be
optimally positioned to capitalize on long-term growth trends in
the electronic materials industry. Our combined business shall
deliver leading-edge innovations to our customers around the
globe,” said Stefan Oschmann, Chairman of the Executive Board and
CEO of Merck KGaA, Darmstadt, Germany.
Seifi Ghasemi, Chairman of Versum, said: “The Merck-Versum
transaction offers compelling and certain value for our
shareholders and will provide long-term benefits for our customers
and employees. This exciting business combination will create
increased scale, product and service depth, enhanced global
presence, strengthened supply chain and combined R&D
capabilities, driving leading innovation. We look forward to
joining together our respective businesses and talented teams.”
Versum is one of the world's leading suppliers of
innovation-driven, high-purity process chemicals, gases and
equipment for semiconductor manufacturing. The company reported
annual sales of approximately €1.2 billion ($1.4 billion) in
FY2018, has approximately 2,300 employees, and operates
15 manufacturing and seven research and development facilities
throughout Asia and North America. Versum has achieved revenue and
adjusted EBITDA compounded annual growth in excess of 10% over the
last three fiscal years with industry-leading adjusted EBITDA
margins at 33%.
The business combination is expected to significantly strengthen
Merck KGaA, Darmstadt, Germany’s Performance Materials business
sector, creating a leading electronic materials player focused on
the semiconductor and display industries. The business combination
rebalances the company’s diversified three pillar portfolio of
Healthcare, Life Science and Performance Materials while executing
on Performance Material’s previously communicated transformation
program.
The combined companies and their customers and employees will
benefit from increased scale, product portfolio, innovation and
services depth, globally. In addition, with the combined business,
the Performance Materials business sector will strengthen its
global supply chain.
Merck KGaA, Darmstadt, Germany intends to maintain Versum’s
Tempe, AZ headquarters as the major hub for the combined electronic
materials business in the United States, complementing Merck KGaA,
Darmstadt, Germany’s already strong footprint and track record as a
top employer in the U.S. Over the past decade, the company has
invested approximately $24 billion in the U.S. through
acquisitions alone, including the successful acquisitions of
Millipore in 2010 and Sigma-Aldrich in 2015. Versum employees will
become an integral part of a leading electronic materials business
and will benefit from new and exciting development opportunities
within a truly global science and technology company.
The agreed upon price reflects an enterprise value (EV) for
Versum of approximately €5.8 billion, implying an EV/2019
EBITDA multiple of approximately 13.7x based upon consensus
estimates and a pro-forma multiple of 11.6x including €75 million
of identified annual run-rate cost synergies. The business
combination is expected to be immediately accretive to earnings per
share pre (EPS pre) and accretive to reported EPS in the third full
year after closing.
Versum’s Board of Directors, in consultation with its legal and
financial advisors, has unanimously determined that this business
combination constitutes a “Superior Proposal” as defined in
Versum’s previously announced merger agreement with Entegris, Inc.,
and Versum has terminated the merger agreement with Entegris
concurrently with the execution of the definitive agreement with
Merck KGaA, Darmstadt, Germany.
The transaction is expected to close in the second half of 2019,
subject to the approval of Versum stockholders at a Versum special
meeting, regulatory clearances and the satisfaction of other
customary closing conditions. The applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, for U.S. antitrust purposes has already expired.
The business combination will be financed with cash on hand and
debt by way of a facilities agreement with Bank of America Merrill
Lynch, BNP Paribas Fortis and Deutsche Bank AG. Merck KGaA,
Darmstadt, Germany, is committed to preserving its strong
investment grade credit rating.
Concurrently with the signing, the previously announced tender
offer to acquire Versum common stock has been terminated and the
contested solicitation of proxies has also ended.
Merck KGaA, Darmstadt, Germany, will be hosting a conference
call with the financial community at 10:00 am EST to discuss the
business combination.
Copies of the Merger Agreement and other related materials are
available on the SEC website at www.sec.gov.
Guggenheim Securities, LLC and Goldman Sachs & Co. LLC are
acting as financial advisors, and Sullivan & Cromwell LLP is
acting as legal counsel to Merck KGaA, Darmstadt, Germany, in
connection with the business combination. Lazard and Citi are
serving as financial advisors to Versum and Simpson Thacher &
Bartlett LLP is serving as legal counsel.
All Merck KGaA, Darmstadt, Germany, press releases are
distributed by e-mail at the same time they become available on the
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please go to www.emdgroup.com/subscribe to register for your online
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About Merck KGaA, Darmstadt, Germany
Merck KGaA, Darmstadt, Germany, a long-term oriented,
predominantly family-owned leader in science and technology,
operates across healthcare, life science and performance materials.
Around 52,000 employees work to make a positive difference to
millions of people’s lives every day by creating more joyful and
sustainable ways to live. In Merck KGaA, Darmstadt, Germany’s more
than 350-year history, people have always been and will continue to
be at the center of everything it does. From advancing gene editing
technologies and discovering unique ways to treat the most
challenging diseases to enabling the intelligence of devices – the
company is everywhere. In 2018, Merck KGaA, Darmstadt, Germany,
generated sales of € 14.8 billion in 66 countries.
The company holds the global rights to the name and trademark
“Merck” internationally. The only exceptions are the United States
and Canada, where the business sectors of Merck KGaA, Darmstadt,
Germany, operate as EMD Serono in healthcare, MilliporeSigma in
life science, and EMD Performance Materials. Since its founding
1668, scientific exploration and responsible entrepreneurship have
been key to the company’s technological and scientific advances. To
this day, the founding family remains the majority owner of the
publicly listed company.
About Versum Materials
Versum Materials, Inc. (NYSE: VSM) is a leading global
specialty materials company providing high-purity chemicals and
gases, delivery systems, services and materials expertise to meet
the evolving needs of the global semiconductor and display
industries. Derived from the Latin word for "toward," the name
"Versum" communicates the company's deep commitment to helping
customers move toward the future by collaborating, innovating and
creating cutting-edge solutions.
A global leader in technology, quality, safety and
reliability, Versum Materials is one of the world's
leading suppliers of next-generation CMP slurries, ultra-thin
dielectric and metal film precursors, formulated cleans and etching
products, and delivery equipment that has revolutionized the
semiconductor industry. Versum Materials reported fiscal
year 2018 annual sales of about U.S. $1.4 billion, has
approximately 2,300 employees and operates 14 major facilities
in Asia and the North America. It is headquartered
in Tempe, Arizona. Versum Materials had operated for
more than three decades as a division of Air Products and
Chemicals, Inc. (NYSE: APD).
For additional information, please
visit http://www.versummaterials.com.
Cautionary Statement Regarding Forward-Looking
Statements
This communication may contain forward-looking statements based
on current assumptions and forecasts made by Merck KGaA, Darmstadt,
Germany’s and Versum Materials, Inc.’s (“Versum”) management.
Various known and unknown risks, uncertainties and other factors
could lead to material differences between the actual future
results, financial situation, development or performance of the
company and the estimates given here. These factors include the
following: Merck KGaA, Darmstadt, Germany’s ability to successfully
complete the proposed acquisition of Versum or realize the
anticipated benefits of the proposed transaction in the expected
time-frames or at all; Merck KGaA, Darmstadt, Germany’s ability to
successfully integrate Versum’s operations into those of Merck
KGaA, Darmstadt, Germany; such integration may be more difficult,
time-consuming or costly than expected; the failure to obtain
Versum’s stockholders’ approval of the proposed transaction; the
failure of any of the conditions to the proposed transaction to be
satisfied; revenues following the proposed transaction may be lower
than expected; operating costs, customer loss and business
disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers, clients or
suppliers) may be greater than expected following the proposed
transaction; the retention of certain key employees at Versum;
risks associated with the disruption of management’s attention from
ongoing business operations due to the proposed transaction; the
outcome of any legal proceedings related to the proposed
transaction; the impact of the proposed transaction on Versum’s
credit rating; the parties’ ability to meet expectations regarding
the timing and completion of the proposed transaction; delays in
obtaining any approvals required for the proposed transaction or an
inability to obtain them on the terms proposed or on the
anticipated schedule; the impact of indebtedness incurred by Merck
KGaA, Darmstadt, Germany, in connection with the proposed
transaction; the effects of the business combination of Versum and
Merck KGaA, Darmstadt, Germany, including the combined company’s
future financial condition, operating results, strategy and plans;
and other factors discussed in Merck KGaA, Darmstadt, Germany’s
public reports which are available on the Merck KGaA, Darmstadt,
Germany, website at www.emdgroup.com or in Versum’s Annual Report
on Form 10-K filed with the U.S. Securities and Exchange Commission
(the “SEC”) for the fiscal year ended on September 30, 2018 and
Versum’s other filings with the SEC, which are available at
http://www.sec.gov and Versum’s website at www.versummaterials.com.
Except as otherwise required by law, Merck KGaA, Darmstadt, Germany
and Versum assume no liability whatsoever to update these
forward-looking statements or to conform them to future events or
developments. Readers are cautioned not to place undue reliance on
these forward-looking statements that speak only as of the date
hereof.
Additional Important Information and Where to Find It
This communication relates to the proposed merger transaction
involving Versum and Merck KGaA, Darmstadt, Germany. In connection
with the proposed merger, Versum and Merck KGaA, Darmstadt,
Germany, intend to file relevant materials with the SEC, including
Versum’s proxy statement on Schedule 14A (the “Proxy Statement”).
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, and is not a substitute for the Proxy
Statement or any other document that Versum or Merck KGaA,
Darmstadt, Germany, may file with the SEC or send to Versum’s
stockholders in connection with the proposed merger. STOCKHOLDERS
OF VERSUM ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE
SEC, INCLUDING THE PROXY STATEMENT, WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
MERGER. Investors and security holders will be able to obtain the
documents (when available) free of charge at the SEC’s web site,
http://www.sec.gov, or Versum’s website at
http://investors.versummaterials.com or by phone at
484-275-5907.
Participants in Solicitation
Versum, Merck KGaA, Darmstadt, Germany, and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the holders of Versum common
stock in respect of the proposed transaction. Information about the
directors and executive officers of Versum is set forth in Versum’s
Annual Report on Form 10-K for the fiscal year ended September 30,
2018, which was filed with the SEC on November 21, 2018, and the
proxy statement for Versum’s 2019 annual meeting of stockholders,
which was filed with the SEC on December 20, 2018. Information
about the directors and executive officers of Merck KGaA,
Darmstadt, Germany, is set forth on Schedule I of the Schedule 14A
filed by Merck KGaA, Darmstadt, Germany, with the SEC on March 22,
2019. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the Proxy Statement and other relevant materials to be filed with
the SEC in respect of the proposed transaction when they become
available.
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Merck KGaA, Darmstadt, Germany ContactsMedia
RelationsThomas Moellerthomas.moeller@emdgroup.comPhone: +49
6151 72-62445
Investor Relationsinvestor.relations@emdgroup.comPhone:
+49 6151 72-3321
Versum Materials ContactsMedia RelationsTiffany
Elletiffany.elle@versummaterials.comPhone: 480-282-6475
Investor RelationsSoohwan Kim,
CFAsoohwan.kim@versummaterials.comPhone: 602-282-0957
Sard Verbinnen & CoEmily Claffey / Julie
RudnickPhone: 212-687-8080
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